IDK.

Bet you thought the next big story in the ailing daily deals business was going to be Andrew Mason's ouster. And yet, it's a competitor making headlines: Bloomberg News reports that LivingSocial has laid off 400 of its 4,500 employees. That's about 9 percent of its staff, for those keeping score at home.  

Hardest hit were the customer service, sales and editorial departments, spokesperson Andrew Weinstein told CNNMoney, and cuts were concentrated in the U.S. Washington, D.C. lost 160 jobs, because customer service ops are being moved to, ugh, Tucson. Mr. Weinstein explained that the cuts "will free up additional resources for the company to invest in some of the critical things in our business, like mobile efforts."

Just last month, Amazon reported that it had lost $169 million of a $175 million investment in the company. The wrath of Bezos is not to be trifled with.

Suddenly, Mr. Mason's week looks a lot better.

Mr. James (Photo: Lot 18)

Yesterday, Lot18--the members-only site for flash sales of wine--announced in a statement distributed to wine industry publications that it will permanently shutter its U.K. operations, effective at the end of the week. That includes laying off six full-time employees.

Apparently, British oenophiles are hard customers to come by these days.

The statement explains the closing: "The supermarkets’ stranglehold on the UK market proved too powerful for us to compete with and we have not experienced the anticipated growth rate."

For those keeping score at home, this is not the first time Lot18 has dropped the axe on a significant number of employees. Back in January, the luxe startup let go of 15 percent of its staff--its first stumble following an explosive expansion. At the time, Lot18 CEO Philip James told Betabeat, "A lot of this is a natural part of the way a business grows and evolves." Think he's currently eating--or perhaps swigging--his words?

Then, in May, Mr. James (in what a source called "a show of bravado") began straight-up paying unhappy employees to leave, following the shuttering of its gourmet and lifestyle brands. Seven employees were reportedly so dissatisfied that they took the money and ran. “Lot18 seems to be imploding and the only non-disgruntled employees there are the new ones," one source told us at the time. "Again, from what I hear you can cut the tension with a knife over there right now.”

Finally, just last month, came another blow to the epicurean e-commerce company. Lot18 once again announced sweeping layoffs, firing 11 of its employees and cutting its food and travel verticals. Mr. James chalked the move up to the fact that the company, which has raised a total of $44.5 million according to Crunchbase, got a little trigger-happy with their cash: "One of the perils of having a lot of money is it's easy to launch a lot of things," he told Betabeat.

The closing of the 4-month-old U.K. operation may be another attempt for the company to return to its "core offering...changing the wine business," as Mr. James told Betabeat back in June. And perhaps Lot18's platform--with its built-in compliance with local liquor laws--wasn't as disruptive in the U.K, which lacks America's patchwork 50-state market.

Lot18 will still continue to operate in the U.S. as well as France, where it acquired Paris-based Vinobest in December. We can imagine it's a little easier to build upon an already-established business than start from scratch.

Does this signal the end of Lot18's scaling back, or can we expect more layoffs at its U.S. operations? We'll keep an ear to the ground.

Lot 18 declined to comment.

If you have any more information, drop us a line: tips [at] betabeat [dot] com.

Additional reporting by Kelly Faircloth.

Ms. Pische (Google+)

Daily deals were on the rise last year, and for a few heady months everyone got really excited about them. Groupon's copy was still cute and quirky and hadn't yet begun to tip over into cloying; 2-for-1 skydiving lessons were still a happy novelty; this reporter even interviewed for a Google Offers copywriting gig (and no, she didn't get it).

But then came that faint gloom cloud, and suddenly the daily deal business model was being called into question. And frankly, it got really, really tiring to delete emails from Groupon, Living Social and Google Offers on a regular basis for coupons we would occasionally buy and then never use.

That's why we're thankful for Unsubscribe Deals, a new web application from a "recovering lawyer" named Edwin Hermawan and a West Village waitress named Lea Pische. In one easy step, the app connects to your Gmail account and automatically unsubscribes you from the deals emails you signed up for, including Groupon, Amazon Local and Daily Candy.

From an email Ms. Pische sent us:

We started at a hackathon. At Pivotal Labs if you must know. We were trying to hijack a Pivotal Labs engineer and find our mythical tech cofounder. All we got were awkward interactions and a random conversation about postgreSQL.

While stumbling home, we started checking our text messages and emails... and we kept getting these emails from daily deal sites. My ESPN digest and fantasy league update totally got lost.

So we woke up, called our our favourite Polish front end coder and a favor from my Muay Thai sparring partner (he happens to be a really good designer that I could never ever afford) and made UnsubscribeDeals.com.

We help the 99% that get flooded by daily deal emails. What side are you on?

We think Ms. Pische and Mr. Hermawan might have careers in creative writing or PR should this whole Unsubscribe Deals thing not work out.

Ms. Yeoh (linkedin.com)

When the daily deals trend collapses, the third-party client apps that streamline daily deals will be the first to go. We're getting a whiff of that today with the announcement that CityPockets, a New York-based e-coupon organizer that aggregates all of your deals, is shutting down.

In an email sent out to users today, CEO Cheryl Yeoh wrote:

I deeply regret to announce that CityPockets will completely shut down on June 30, 2012, since we are no longer able to maintain the product for a variety of reasons....We'd like to direct you to our friends at DealsGoRound and Yipit, both offering deal management services and we hope that they will fulfill your needs.

Ouch. Directing your users to former competitors? That's gotta sting.

"We've always been friends with DealsGoRound and Yipit, and wanted our loyal fans to have an alternative to store / manage their vouchers," Ms. Yeoh told Betabeat via email. "It's only fitting for us to show some love to our fellow daily deal friends."

Fortunately for CityPockets fans, Ms. Yeoh also took the opportunity to announce a new venture: It's called Reclip.It, and it's a "social catalog" for the sharing of deals, coupons and discounted products. The social component means that you can follow "deal bloggers, friends, or brands and get notified whenever they clip a good deal into their folder." It looks pretty much exactly like a Pinterest for coupons.

Even though CityPockets will be completely shutting down on June 30th, ReClip.It's similarities--both in industry and concept--make it seem more like a pivot than anything else.

"People have been clipping coupons for decades and the industry that has been primarily driven by ad-ridden, cluttered and outdated coupon sites is ripe for disruption," said Ms. Yeoh.

"We're initially focusing on serving the mommy bloggers who curate coupons and deals on their website to the 32M moms who subscribe to them," she added.

Ms. Kang (twitter.com)

On most online dating sites, there's no incentive to connect with someone right away. Match.com profiles are just always there for you to peruse, so there's no pressure to act now and meet your perfect match. Recent Harvard Business School grad Arum Kang wants to change that with her new startup Coffee Meets Bagel, which integrates the concept of time-sensitive matchmaking with daily deals incentives.

Coffee Meets Bagel works like this: users sign up using Facebook connect so that the site can privately match you with mutual friends. Every day at 12pm, the site sends you an email with a match chosen from your social graph, and you have 24 hours to decide whether to "like" or "pass" on the person.

If there's a mutual like--meaning that both users liked each other's profiles--you're both sent a text message through a private line that allows you to talk to each other for up to seven days without exchanging contact information. Through that line, you can either plan a date or exchange numbers to plan one for the future.

Users who get a mutual like also receive an email in their inbox with a deal for a local business--something like a complimentary cheese plate or prosecco at a New York restaurant--to incentivize actually going on the date.

Ms. Kang told Betabeat that she arrived at this online dating model by looking at what customers wanted, and examining what other dating sites were lacking.

"Coffee Meets Bagel was really born while we were brainstorming about how do we actually make online dating compelling for people to really get excited about it, and not just something that people would choose to do as a last ditch effort," she told Betabeat by phone. "After graduation it’s harder and harder to meet people, and a lot of people resort to online dating--but there’s still a stigma. We wanted to create a company and a brand that’s exciting and that people can look forward to interacting with."

Ms. Kang thinks that receiving a once a day email will provide users with something to look forward to, without inundating their inboxes with low-quality matches. And because matches are also curated based on your social graph, they tend to be people you'd be more interested in than the strangers on sites like OkCupid.

"When you think about the dating experience, you really have to think from the customer’s experience and the whole dating cycle," said Ms. Kang. "Instead of [stopping involvement] once they're connected, we wanted to make meeting the person easier. We recommend venues that people might like and give people a little bit of an incentive to go there. When you connect, you get a text to start talking, and you also immediately get emails saying, 'By the way, you get this gift from a venue to celebrate your first date.'"

The deals angle seems like a great incentive to get people to actually go out, though there are ways to get around having to use the deal on your date. Ms. Kang said that each complimentary gift comes with different policies. "Some venues make sure it's used by the matches by requiring reservation with a unique code from us that only the couples get," she said. "Once you make the reservation with the code though, you don't have to mention it again when you arrive. However, we work case by case with each venue to fit their needs."

The site is free for users, and plans to make money through a virtual currency model, where users can buy or earn "coffee beans" to spend on virtual gifts like "open sesame," which, when purchased, shows you exactly which mutual friends you and your match have in common.

Coffee Meets Bagel has been in beta since February, but just launched officially last week, and already boasts thousands of users. The site is currently bootstrapped, but Ms. Kang said the team is actively fundraising for an angel round.

With the future of daily deals rather questionable, it will be interesting to see if the model can be rejuvenated by being adapted into another industry. Meanwhile, the biggest problem we see with Coffee Meets Bagel is that it unfortunately has us craving both a coffee and a bagel.

(Daily Deal Media)

All the tech world loves a demo, so we couldn’t leave yesterday’s Daily Deal Summit without catching the Tech Showcase. Four CEOs--slowly losing their audience to lunch--were each assigned eight minutes to sell us on new solutions. Billed as having the potential to "dramatically improve" attendees' businesses, how did they stack up?

First up and perhaps most relevant to the daily-deal-selling audience was ActivePath CEO Jeff Kupietzky, just in from Israel and ready to sell us on the merits of the company's direct marketing solution, ActiveMail. He whipped out some scary statistics about how people get more than a hundred emails a day and spend two and half hours a day weeding through them. Meanwhile, marketers are still opting for a “spray and pray” approach, often at the risk of being tagged as spam. The current solution is to strip out all the rich media, opting for a “lowest common denominator” approach. The problem, of course, is that dampens engagement. ActiveMail’s solution: Add back the interactivity, including things like video, roll-over menus, and purchase ability in the email itself.

Next up was Closely CEO Perry Evans. He introduced the audience to Perch, Closely's new small-business app. The elevator pitch: “It’s a merchant’s birdseye view of their business environment.” In short, local businesses are spending way too much time combing social check-in and daily deal sites, attempting to figure out a) what their competitors are doing and b) what’s going on around them, event-wise. Perch pulls in data from sources like Foursquare and Yipit to aggregate the answer. The app is currently in private beta, but right now they’re only taking businesses. Harel said it should open up in a couple of months.

Centzy in particular piqued our interest (though it seemed the least directly relevant to the conference). Backed by Lightbank and ffVC, the company was described by CEO Jay Shek as “a comparison shopping engine for local services.” So why bother? Apparently fewer than 25 percent of local businesses post their prices online. “Imagine if you went to Google and 75 percent of websites weren’t listed,” Shek said. “It would be like the stone ages.” Right now, if you want the cheapest oil change within three blocks, you have to pick up the phone and start calling.

Their solution: Use paid crowdsourcing, like Amazon’s Mechanical Turk, to get that information. Shek claimed this approach is 97 percent accurate and 100 percent comprehensive, and he’s confident the approach can scale nationwide for a reasonable amount of money. We’ll see.

Last and perhaps most cruelly given the competition with lunch: BiteHunter, which aggregates local dining deals. CEO Gil Harel took the audience through a tour of newly released version 2.0, currently burning up the app store charts and boasting 60,000 downloads. He explained they’d learned two things with their previous iteration: People are still overwhelmed by their choices, and it’s a pain to leave the app to purchase a deal. To crack that first nut, they’ve made it possible to browse via photo grid, map view, or list. For the second, they’ve added in-app purchases.

Mr. Rohan (LinkedIn.com)

The fate of Groupon has been a topic of intense interest on this blog. So how fares the discount diva these days? According to one Wall Street analyst speaking yesterday to the Daily Deals Summit, the long-term future might be bright, but she's likely to break a few more hearts first.

Stifel Nicolaus managing director Jordan Rohan introduced himself by explaining that he’s basically the Methuselah of internet stock analysts. Having started in March 1999, “I’ve covered eons of internet business models,” he informed the crowd.

That means he watched the first internet bubble explode like over-microwaved leftovers, offering some important context for understanding Groupon’s stock troubles.

First, some numbers: The company took in $4 billion in gross billings in 2011, with a take rate of about 40 percent. They’ve got more than 50 percent market share (according to Mr. Rohan’s numbers, via Yipit.) The stock briefly topped out at $31/share, making for a $20 billion market cap. That put Groupon in the rarefied company of perhaps 10 or 12 other internet companies, Mr. Rohan explained, and those “were some very high expectations.”

Unfortunately, those expectations were maybe a little heated. Just a couple of weeks ago, Groupon had to revise its first quarterly earnings report to reflect higher-than-anticipated return rates. Rohan walked through some of those numbers, suggesting growing pains as the company experiments with its business model. Higher-value items--laser hair removal and vacations, as opposed to burritos and magazine subscriptions--are more likely to be returned. (Which makes sense.) They’re still working toward the right cocktail of satisfied consumers, happy merchants, and fat margins.

But there were consequences: “This is just inexcusable from the perspective of Wall Street analysts,” Mr. Rohan admonished. Groupon now has a market cap around $7.5 billion, a third of its peak value.

In short, he explained, the company is following a well-trod path from hype to disillusionment. That’s a rough period for investors and entrepreneurs, but it doesn’t necessarily mean the stock is doomed forever. Mr. Rohan said it’s typical for companies to lose around 80 percent of their value in this bleak adjustment period. In fact, he’s even optimistic about the long term: “The company will figure out its business model during this period of disillusionment,” he said, adding:

"There will be a brighter day in the future. I’m not so sure in the near term for the stock--I wouldn’t own shares today--but I can see as the facts change, as we clear out of this period of disillusionment, that it will stabilize and turn higher in the future."

Of course, that leaves the question of what that improved business model will look like. But those aren't exactly reassuring numbers for a certain enormously-hyped social network scheduled to make its own IPO debut.

(via Twitter.com/AustinEvarts)

Slouched comfortably in his chair, holding forth on the prospects of a would-be Groupon, TechStars’ David Tisch expressed doubts about the name of the very event where he was, at that moment, speaking. “The word ‘daily deal’ is, like, staring me in the face, and I’m scared of it.”

“It’s poison, I think, to a large audience outside of probably this room.”

He addressed a diverse crowd: While the suits certainly turned out in force, Betabeat spotted more than a few untucked shirts and even one battered pair of men’s flip-flops. (The panelists themselves reached equilibrium somewhere in the vicinity of business casual.) Diversity of dress code notwithstanding, the conference had the just-between-us tone of a small industry gathering.

And that industry isn’t wholly spooked, but it does seem a little concerned about the weather. Mr. Tisch’s comment tapped into a faint anxiety running throughout the first day of the 2012 Daily Deal Summit, staged at the Times Square Crowne Plaza in partnership with online trade publication DailyDealMedia. Panel titles like “State of the Union: Industry Interrupted” and “Too Fast, Too Furious?” betrayed concern about the industry’s future that aren’t exactly unfounded.

At one point, a poll of the audience revealed a substantial number had unsubscribed from at least one daily deal email list. A tiny few even admitted to unsubscribing from their own company’s.

Nor are the industry giants simply sitting pretty, peering down at the teeming also-rans. Asked by moderator (and Yipit cofounder) Jim Moran about what a company like Groupon should be doing, Mr. Tisch suggested strengthening ties with local merchants, with an eye to becoming something like the internet equivalent of the Yellow Pages. Angel investor Benjamin Sun, on the other hand, sees Groupon leveraging their acquisition lists into sales of everything from watches to treadmills. Maintaining the status quo didn't seem to be an option.

The audience, for their part, got a little aggressive with this particular batch of panelists. First the speakers faced an interrogation regarding the high costs of customer acquisition. (GiltCity VP Florent Peyre answered first and therefore bore the brunt, until Mr. Moran gently moved things along.) Another attendee wondered about merchants refusing to honor deals, while still another challenged the Washington Post’s Tim Condon on the efficacy (or lack thereof) of tying deals to content.

The state of the industry having been assessed, the conference moved onto more nuts-and-bolts—though still somewhat downbeat—panels. There was much discussion of user testing best practices and optimal email times at “The Year of the Unsubscribe?,” while “Making the Deal Model Work” parsed ways forward for the business.

By this point, a fair bit of the audience seemed to have trickled out. Betabeat located them on the way out, gathered into tight clusters of seemingly intense discussion. Back on the sidewalk, we saw nothing but sunshine.

Mr. Ryan, at TechCrunch Disrupt New York last May.

Around 4 p.m. on a recent Thursday, all but 14 of the employees of the members-only luxury e-commerce site Lot18 got an email asking them to report to the new conference room for an urgent meeting. The remaining employees, including the vice president of operations and director of operations, received an almost-identical note but were asked to report to the “alt” conference room instead. They were told they were being let go, asked to leave the building immediately and instructed to return on Saturday to clean out their desks.

The survivors were shocked by the layoffs, which came a day earlier than planned due to inquiries by Betabeat. Lot18, which started with private sales for wine before moving into full-price wine and epicurean deals, has raised a total of $44.5 million from investors—its latest round spearheaded in November by the highly regarded Accel Partners. Lot18 also moved into a new office over the summer that features a tasting room, mounted LCD screens that pop up a buyer’s location on a map every time Lot18 sells a bottle and a permanent DJ booth. In its one-year existence, Lot18 launched several new verticals, bought Paris-based e-commerce site Vinobest, and announced a foray into Europe.

To industry insiders, the scenario sounded familiar. Mass flash sales—deep discounts that expire usually after one to three days—had been touted as the first real innovation in e-commerce in years, and start-ups that applied the flash-sales phenomenon to the luxury market had investors salivating. But the former venture capital darlings suddenly seemed to be hemorrhaging employees. Earlier this month, another site, Boston-based Rue La La, slashed 60 of its 550 employees after months of growth.

Suddenly, the question is being asked: Could flash sales for the well-to-do wind up being more of a marketing gimmick than a business model?

A week before Lot18’s conference room trail of tears, Betabeat broke the news that Gilt Groupe, the high-fashion flash sales powerhouse, was also shedding staffers. Back in November, Gilt Groupe CEO Kevin Ryan happily boasted about hiring a worker a day in 2011. But by late January, the company was admitting that 10 percent of its 900-person staff had been dismissed, despite the company’s having raised $138 million less than a year prior at a $1 billion valuation.

Mr. Ryan assured the press that Gilt would have its head count back up by the end of March. Insiders say the layoffs are part of a prudent debloating before the company packs up its PowerPoints and sets out to pitch investors in the ritual pre-IPO roadshow. Gilt has raised about $238 million from investors and Mr. Ryan says a public offering could happen by the end of the year, but insists it’s unrelated. “Forget IPO,” he told Betabeat by phone. “I think it’s the right time to cross over into profitability.”

The other companies had similar explanations for downsizing. Lot18 had grown too fast, management explained, and those being let go were “nonessential.” Lot18’s cofounder and CEO Philip James, an oenophile who has two wine start-ups and a Mt. Everest climb under his belt, emailed a statement: “Lot18 is a business built on core fundamentals and we expect to reach profitability on the money we’ve raised. I’m not going to preclude the possibility that we’ll raise capital in the future, but that would be for growth.” Rue La La brushed off its layoffs as a product of “restructuring,” “outsourcing” and “consolidating.”

With $500 million in revenue in 2011, Gilt Groupe is moving toward full-price and private label offerings, and is likely to emerge from the moment of reckoning on top of the heap thanks to its buying power with brands. (Unlike some competitors, sources say, it never resorted to the black market in flash sales early years.) But scuttlebutt from inside Gilt’s velvet rope is that some of its new verticals are falling short of hopes.

When Gilt Groupe arrived in November 2007, its sparse home page conveyed maturity, taste and exclusivity—a black and gold gateway into your own private sample sale. Super savings don’t have to be gauche, Gilt whispered, a relief amid the Great Recession, both for the luxury brands that found themselves unable to move handbags and for their status-conscious customers.

Mr. Ryan, a Doubleclick veteran from Silicon Alley’s early years, borrowed the idea for Gilt from Ventee-Privee, the grand-mère of flash sales sites, which launched in 2001 and claims a $3 billion valuation. But for the public face of the company, he put forth cofounders Alexis Maybank and Alexandra Wilkis Wilson: leggy, blond, accomplished Harvard Business School classmates, and living embodiments of the Gilt Groupe customer (chairman Susan Lyne joined later). Their first sale was a still up-and-coming designer named Zac Posen, whom they met at Harvard, natch.

As Gilt captured media attention, mindshare and $25 million in revenue in its second year, luxury flash sales sites began raking in venture capital. Ideeli has raised $64.8 million; Beyond the Rack is up to $53.6 million. In 2009, Rue La La was acquired in a deal worth $350 million; in early 2011, Nordstrom acquired Hautelook for a deal worth $270 million. One Kings Lane, the original Gilt Home, has collected a tidy $63 million in VC funding. Daily Candy launched a private shopping club; eBay launched a high-end fashion deals site. The luxury craze isn’t over: The Clymb raised $2 million for a members-based deals site for the outdoor market over the summer and Los Angeles-based LuxeYard just announced a $3.5 million investment last week.

Retailers had always struggled with the problem of unloading unsold merchandise without degrading their brands, relying on outlets like Ross Dress for Less or T.J. Maxx. Gilt Groupe presented a sleeker option, and the membership structure of “private sales” lent it an air of exclusivity. “It felt like you were walking through Barneys, it’s just that everything is 70 percent off,” said one former employee.

Gilt Groupe also found macroeconomic forces aligning in its favor. On the heels of the consumer boom that preceded the recession, estimates are that luxury goods inventory rose to 10 times its normal level. And Gilt was poised to help. By 2009, it was up to $170 million, and by 2010, $423 million. “They were just the shit, right?” said Matthew Carroll, founder of the outdoor brand Cloven Footwear and a Gilt Groupe vendor who has written something of a dissertation on the company’s meteoric rise on Forbes.com. “In 2009 I worked with them and I felt honored just to get an invite to the service. I felt cool.”

Soon, manufacturers began cutting production, and by 2010 the supply of high-end goods had dried up. Flash sales start-ups responded with varied approaches. Ideeli went downmarket. “I’m not the most popular guy at parties in New York because all our friends are after high-end brands,” Ideeli CEO Paul Hurley sheepishly confessed to Reuters. “But the opportunity is much larger elsewhere.”

Gilt stayed the luxury course, opting to sell more categories to that same affluent urban sophisticate. After Gilt for women, there was Gilt Man, then sites for kids, design, travelers, foodies and so on. Around Christmas 2010, they even sold a few Volkswagen Jettas. “Gilt was one of the first ones to get into flash sales and I think they wanted to do that for every luxury vertical and be the Amazon of luxury, rather than a flash sales site,” said a former Gilt employee. “It was really a sprint to own the market,” said another former employee about the new verticals. “At the time we were growing faster than eBay did, we were growing faster than Amazon did out of the gate. It’s slowed now.”

Mr. Ryan prefers to err on the aggressive side. “I certainly would rather launch five new things—and they might be verticals, initiatives or different promotions—and maybe one of them doesn’t work and that’s O.K. That’s fine. Being the last person to market? Certainly you’ll be a loser,” he said, adding, “From my point of view, to date, all of our verticals have worked.”

Not everyone agrees. Some of those new verticals, like Gilt Home and Gilt Taste, involved increasing the ratio of full-priced to discounted items. The men’s site Park & Bond, on the other hand, was Gilt’s first exclusively full-priced venture. To sell its move up-market, Gilt Groupe borrowed some gloss from the glossies, tapping Ruth Reichl, Gourmet’s raven-haired high priestess of haute cuisine, for Gilt Taste and partnering with GQ for Park & Bond. “They really went after people, really recruited, really made a big deal [of marquee hires] to the press, dangling stock options,” said one former employer. “I have to ask was any of that done with a sustainable business in mind.”

The reaction was mixed. “I understand there’s foodies out there, but then why did Harry & David go bankrupt last year?” said a Gilt Groupe fashion vendor. “They had people who had bought their shit at Christmas every single year for like 20 years and they still go out of business for specialty food.”

Park & Bond “was a huge, huge bomb,” one former employee said. “That whole part of the business is essentially being picked apart and sort of let go.” The departure of Park & Bond president John Auerbach was announced at the same time as the layoffs (Gilt said he left to pursue other projects). “Everybody knew Park & Bond was in trouble because they were trying to be aspirational, and being aspirational as a retailer is dangerous,” explained one Gilt Groupe vendor. “They were trying to buy these $10,000 jackets because ‘we need to be high-class, we need to be ultra-luxury.’ Well, that’s cool if that’s your goal, dude, but if it doesn’t work it doesn’t work.”

Not all the Gilt Groupe’s reaches were met with as much skepticism. Jetsetter, the luxury travel site, gets rave reviews from customers and does 40 percent of its revenue in full-priced offerings. But Gilt City, which bills itself as selling “experiences” and therefore overlaps with both the Jetsetters and Groupons of the world, failed to get much traction beyond a few core cities. Along with closing six markets as part of the layoffs, the company announced Gilt City president Nate Richardson would also be leaving.

Some of January’s fat-trimming was more literal. A tipster to New York spotted a new sign in Gilt’s normally generously stocked pantry: “Gilt has made a New Year’s Resolution to cut the following items from our purchasing diet across all locations: all fruits, all yogurt, all cheeses, Thomas’ English muffins, granola and health bars, Rice Krispie treats, Poptarts, and Pellegrino.”

When asked, Mr. Ryan cheerfully dismissed speculation that Park & Bond would fold into Gilt Man and rumors of Gilt City’s demise and promised all the remaining verticals are here to stay. “Park & Bond is doing very well, although not as well as we had in the budget,” he said. Mr. Ryan said the problem was merely one of single-digit inventory write-downs: “We bought more than we could sell.”

One former employee implied that missed projections were more than a miscalculation. “I think the feeling among the staff was that the revenue projections were pretty wildly irrational,” the source said. “I was not convinced that Park & Bond was being set up for success. I thought, if we make these revenue projections, it will be a miracle.”

According to the source, either the “premise was framed incorrectly” or the strategy was simply, “Let’s do this so that we can say we did it—on the backs of a lot of selfless, really talented people,” the source said, citing long hours and staffers' commitment to the project.

Gilt Groupe President Andy Page responded to that idea by email, citing the changes inherent in a dynamic company. “Our performance is based on actual results, not what we forecast—especially for a new business. We reforecast every month, for each of our businesses, and our investors have visibility into that process. The way we demonstrate our ability to start a full price business is to create a successful brand, sell a tremendous amount of product and delight our customers. We did all these things. Park & Bond is the fastest growing business in the first 6 months compared to any of our other properties, but it was still over resourced.”

The same former employer disputed claims Gilt Groupe has been making to the press for years that the company is immune to industry-wide concerns about sourcing inventory. “It’s all spin and its all calculated to have a successful initial public offering, the people who have made it be damned,” the source insisted.

“I currently have visibility into our sales through June and anticipate having more access to product than we require,” Mr. Page replied by email. “That is for several reasons including our relative competitive positioning (more brands using us exclusively) and the volatile holiday season which left brands will a strong excess on hand.” He added that Gilt’s position in flash, “is currently the strongest it has been since I joined the company almost two years ago.”

For now, Mr. Ryan seems content to watch the industry shakeout from his Park Avenue perch, a familiar scene from his DoubleClick days. “I’ve watched this movie since 1996 where an area gets hot. In 1997, we had 37 competitors in ad-serving. Five years later, we were down to about five.”

The story had an portentous ring, especially when Mr. Ryan added, “We bought a bunch of them and a bunch of them went out of business.”

ntiku@observer.com, ajeffries@observer.com

A version of this piece appeared on page A1 of the February 1st, 2011 issue of the New York Observer.

CORRECTION: An earlier version of this story said the Lot18 office has a fireplace; that is incorrect.

Tipsters have written into Betabeat that some of those layoffs are currently underway. "People leaving. Sadness. Super uncomfortable work environment," said one source who wanted to remain anonymous, adding, "General atmosphere is terrifying."

Gilt Groupe raised a $138 million series E round just last May and, in addition to launching new verticals, acquired BuyWithMe last October. Prior to the acquisition, BuyWithMe made its own layoffs, letting go of nearly half the staff in order to make the company more attractive to buyers. As Mr. Ryan indicated, some of the 20 to 25 BuyWithMe staffers that came over to Gilt as part of the deal may be among those let go as "they probably don’t need that many going forward now that the integration has been completed," paraphrased AllThingsD.

Another vertical that Mr. Ryan indicated might experience cuts is Gilt Taste. Since reporting the layoffs at Gilt Groupe, a number of other players in the luxury good and daily deals space have let go of staffers, including RueLaLa, which cut 60 staffers, and Lot18, a Gilt Taste competitor.

Betabeat will updating the story as we learn more. If you have any information about the layoffs or restructuring, please email: tips@betabeat.com.